TSMC Seeds Arizona Subsidiary With $3.5 Billion

Trump plan to bring manufacturing back to US sees Taiwanese chipmaker provide $3.5 billion for promised $12 billion Arizona factory

The world’s biggest contract chipmaker, Taiwan Semiconductor Manufacturing Co Ltd (TSMC) is to provide billions of dollars for a US factory.

The board of directors at TSMC on Tuesday announced that it will provide an investment of paid-in capital of $3.5 billion to set up a wholly-owned subsidiary in Arizona.

It comes after TSMC, after talks with President Donald Trump, announced in May this year that it planned to build a $12 billion factory in Arizona.

Trump talks

That announcement came after the Trump administration revealed at the time that it had been in talks with semiconductor companies about building chip factories in the United States.

Democrat senators wrote to the Trump administration later in May, saying they have “serious questions” about a new chip factory to be built in Arizona.

One of the core promises of Trump’s election as US President in 2016 was his pledge to encourage companies to keep or create jobs in the United States rather than sending them abroad.

This meant retaining and encouraging firms to keep or build new factories in America.

Trump has had some success in this regard among technology firms during his tenure.

In February 2017 for example then Intel CEO Brian Krzanich stood beside Donald Trump at the Resolute desk in the Oval Office to announce that the US chipmaker would invest $7 billion to open a factory (Fab 42) in Arizona, which it claimed at the time would be “the most advanced semiconductor factory in the world”.

Intel’s Fab 42 factory in Chandler, Arizona, is expected to start production sometime this year.

Apple boss Tim Cook also revealed in 2017 that his firm would establish a $1 billion (£776m) fund to promote advanced manufacturing jobs in the United States, although most of its iPhones are still manufactured in the far east.

TSMC factory

TSMC to build a $12 billion factory in Arizona was also viewed as another win for the Trump administration’s efforts to take back manufacturing and jobs from China.

The plan will create over 1,600 jobs in the US state.

It should be remembered that TSMC is a major chip supplier to firms such as Apple, Qualcomm, and even Chinese firms such as Huawei Technologies, which President Trump blacklisted in May last year.

TSMC said the plan was to build the plant over nine years, and construction will begin in 2021. It is the biggest foreign investment by TSMC to date.

The factory will begin production in 2024 and will make sophisticated 5 nanometer chips, which can be used in high-end defense and communications devices.

The factory is expected to process up to 20,000 silicon wafers per month. Each wafer can contain thousands of individual chips.

TSMC manufactures the bulk of its chips in Taiwan, but is known to have older chip facilities in China and Washington state.